UB files petition to stop SBI from selling USL shares

MUMBAI: UB Holdings has filed a petition in the Bombay High Court seeking an order to restrain the State Bank of India from selling shares of group company United Spirits pledged with the bank. UB moved after the bank sold a portion of USL shares given as collateral for loans given by the bank to bankrupt Kingfisher Airlines. Banking industry officials said that SBI sold shares valued at Rs 100 crore last week.

Vijay Mallya, the UB group chairman, fears that SBI's sale will jeopardise his deal to sell a major portion of the company to British drinks giant Diageo.

Diageo and Mallya agreed on a deal in November last year under which Diageo agreed to buy majority stake in USL. Mr Mallya owns about 27% in USL but most of it is pledged with the banks including SBI. Banks have lent close to Rs 7500 crore and decided to take every measure to recover their dues in January. "We have sold a part of shares of USL and we have received notice from UB Holding retrains banks from selling shares.

But we decided to go ahead with selling remain of the shares. We are very confident that the court will rule in our favour," said a senior official from State Bank of India who declined to be quoted. Justice SJ Kathawala will hear the case on April 2.

The move comes within weeks of the finance minister asking the banks to act against rich promoters of ailing companies.